True Religion previously declared bankruptcy in 2017.
Designer jeans company True Religion has filed for Chapter 11 bankruptcy protection for the second time in three years, citing difficulties due to the coronavirus pandemic.
In a bankruptcy filing on Monday, the company said that business has been hurt by the COVID-19 pandemic and prolonged closure of brick-and-mortar stores across the nation. It said this has “accelerated” the liquidity constraints it already faced.
“While the debtors would have preferred to wait-out the current instabilities of the financial markets and retail industry generally, they simply could not afford to do so,” according to court documents.
The company said that bankruptcy was the only way to maximize value for shareholders and stay in business once stay-at-home orders are lifted and non-essential retailers can reopen. The company had already furloughed all non-essential employees, according to court documents.
Many retailers are struggling to stay afloat as the shutdown drags on and their stores remain closed. President Donald Trump has expressed hope that the U.S. could reopen by May 1, however it remains unclear how plausible that is. In the meantime, dozens of retailers have been downgraded by the credit ratings agencies. According to S&P Global Market Intelligence, department stores have become particularly vulnerable and their odds of defaulting have risen sharply in the last month.
This is the second time that True Religion has landed in bankruptcy. It last exited from bankruptcy in 2017 in just four months, after shedding over $350 million in debt, closing stores and investing in e-commerce.
True Religion was founded in Los Angeles in 2002. The company’s founder, Jeff Lubbell, made some 14,000 pairs before making his first sale and then went on to enjoy a boom in popularity for denim priced above $100. However, the company’s jeans have fallen out of favor in recent years amidst increased competition from lower-cost brands like Levi Strauss and Madewell, as well as a boom in athleisure.